Could a slowing economy be a drag on President Trump's re-election prospects?
Trump touts the economy even as the Federal Reserve lowers its growth forecast.
“You look at some of the economic numbers. Nobody thought we'd ever see numbers like that in our country,” Trump bragged in his typical exaggerated style Wednesday at an event in Ohio. “Not for a long time, not for ever. And what we're doing has been incredible.”
But at the same time, the Federal Reserve is sending signals that U.S. economic growth is slowing -- and could slow significantly more leading up to the 2020 presidential election, ominous signs for the president’s re-election prospects, which could swing on the electorate’s impression of a mixed, mushy economy.
Trying to ensure impressions stay positive, the president keeps up a drumbeat of sometimes questionable "good news" claims, capitalizing on market trends through a trifecta of tweets to millions of followers, gaggles with reporters and speeches to supporters.
Trump's relentless focus doesn’t always generate headlines or water cooler talk, but it’s an everyday point of emphasis inside the White House.
On Thursday, Trump met privately with a consortium of business leaders, including the CEOs of Home Depot and JP Morgan Chase, where he participated in a discussion to tout his “business friendly agenda.”
The White House closed the event to reporters, but says Trump “continues to spur economic growth, boost the economy, and allow companies to unleash their full potential.”
Jerome Powell, the chairman of the Federal Reserve, has taken unprecednted flack from Trump for raising interest rates to curb inflation - rate increases the president claims hurt economic growth. But on Wednesday Powell said the Fed would pause planned rate increases because the U.S. economy was slowing -- and could continue to slow in part due to a prolonged Trump trade war with China.
Powell said the Fed has lowered its Gross Domestic Product forecast for 2019 to 2.1 percent growth, a point below 3.1 percent GDP realized between the fourth quarters of 2017 and 2018.
“It is a great time for us to be patient and to watch and wait,” Powell said, explaining why the Fed was not changing interest rates but simultaneously suggesting an additional level of nervousness due to slowing domestic and global growth.
For 2019, the White House predicts a much higher 3.2 percent GDP for the same period, accounting for more than $200 billion in disputed growth and banking on the Tax Cuts and Jobs Act of 2017 to speed up growth this year.
Powell has declined to comment on the conflicting projections.
While the president’s grasp of economic reality is often challenged, fact-checked and spun by his political adversaries as exaggerated, the president nevertheless continues boasting about the economy, which enjoys full employment, high consumer confidence and low inflation.
“We've created more than almost 6 million jobs since the election. And if I would have said that to the fake news during the campaign, they would've said, ‘He exaggerates.’ I'm not exaggerating, but nobody would've believed that could happen,” Trump said Wednesday.
One area of the economy that the Fed and Trump can agree on is anxiety that the slowing global economy could have a negative impact on the U.S. economy, and in turn – his candidacy for another four years in office.
“The world economy is not good, and frankly, if the world economy were good, that would be, in a way, good for us,” Trump said. “So we're fighting there. We're bucking. Europe is down, Asia is down -- a lot of places. Almost every place is down. Except the United States is up, and we're way up.”
Trump says the U.S. is prevailing despite external economic forces – adding his own partisan flare to discredit Democrats as he shifts into campaign mode.
“And just think of what that would be: The world goes up; we go up with the world. The world is down, but we still go up,” Trump said. “Something is happening. That wouldn’t happen under Barack Obama, that I can tell you. It wouldn’t happen under Crooked Hillary Clinton.”
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